Nation's Building News Online: August 23, 2004Print All Articles Text Version |
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In Charley’s Aftermath, Florida Builders Start Down the Long Road to RecoveryHurricanes Bonnie and Charley delivered a one-two punch to Southwest Florida just over a week ago and home builders in the state are still assessing the extent of the massive rebuilding effort that will be needed to restore normalcy to the hardest hit areas. In the meantime, they are warning victims of the disaster to be sure to use licensed contractors and be especially wary of fly-by-night operators. Working with other associations and trade groups, the Florida Home Builders Association has helped to establish a Disaster Contractors Network to provide home owners with information and organize contractors who are able to assist with the reconstruction process. Along with basic construction materials such as cement and OSB, contractors are expected to be in short supply as reconstruction efforts get underway. Currently, only contractors with a Florida license are allowed to do business in the state, and NAHB has forwarded to the HBA of Florida information about reciprocity agreements that will be useful if Governor Jeb Bush decides to fill the contractor shortage from outside of the state. Just one example of the many ways in which the home building community in Florida has rallied to the challenge of restoring normalcy in the storm’s aftermath, the Home Builders Institute, the workforce development arm of NAHB, reported that students from its Project CRAFT training program in Avon Park were helping to unload food and water trucks as that community worked to get back on its feet. While Bonnie delivered only a glancing blow with little physical damage along the Atlantic seaboard, Charley brought devastation to some 25 counties across the state and weighed in as the largest storm to hit Florida since Hurricane Andrew pounded Dade County south of Miami in 1992. Charley was a category IV storm with winds of more than 145 miles per hour when it came ashore in the Port Charlotte area on the Gulf side of the state. It is responsible for at least 23 confirmed deaths and estimates of insured losses topping $11 billion. A preliminary assessment from about half of the affected areas as of Aug. 18 confirmed that 5,898 homes were destroyed, 10,378 sustained major damage, 9,655 minor damage and an additional 21,198 were affected. President George W. Bush has visited the disaster area and has given the site a presidential declaration making victims eligible for low-interest federal loans to rebuild. Federal funds will be used to repair or replace public buildings on a cost sharing basis with state and local governments. Officials from the Federal Emergency Management Agency (FEMA) have begun the process of coordinating response activities and on Aug. 18 opened their Disaster Field Office (DFO) in Orlando. This facility will be the nerve center for all response and recovery operations. Volunteer agencies such as the American Red Cross have been on the ground since the initial onslaught of the storm. The Red Cross has opened 21 shelters and is providing thousands with meals and a place to sleep. It has 14 damage assessment teams in the field to count and classify the number of destroyed and damaged properties. It appears from early, on-the-ground reports that homes built to the newer building codes performed well. Further investigations will be undertaken to fully document how well new residential construction withstood the storm. Ken Ford, with NAHB’s Disaster Assistance Program, reminds builders that all communities can be disrupted by natural disasters and that potential risks should be assessed so that precautions can be taken before, during and after these emergencies. Only 199 out of the 3,069 counties in the U.S. have not been declared disaster areas by the President at some point in their history. For further information on these efforts, e-mail Ken Ford or call him at 800-368-5242 x8228. How Charley Stacks Up
Storm Level Wind Speeds Storm Surge Damage Prior Storms Category One 74-95 mph 4-5 feet above Minimal — Damage primarily to unanchored mobile homes Allison, 1995 Category Two 96-110 mph 6-8 feet above Moderate — Roofing, door and window damage to buildings Georges, 1998 Category Three 111-130 mph 9-12 feet above Extensive — Structural damage to small residences and utility buildings Roxanne, 1995 Category Four 131-155 mph 13-18 feet above normal Extreme — Extensive damage to doors, windows and lower floors of shoreline houses; total roof failures on small residences Hugo, 1989 Category Five Greater than Generally greater Catastrophic — Complete roof failure on many buildings and some complete building failures with small utility buildings blown over or away; severe and extensive window and door damage; mobile homes completely destroyed Camille, 1969 Data Sources:FEMA, Red Cross & CNN NewsBuilding News Coast To CoastWant Safer Buildings? Use 'Smart' Bricks."We are living with more and more smart electronics all around us, but we still live and work in fairly dumb buildings," remarks the University of Illinois Center for Nanoscale Science and Technology's Chang Liu. The researcher and his colleagues have invented a "smart" brick, which is equipped with sensors and other electronic components designed to make structures safer. The sensors track temperature, vibration and movement, employing wireless technology to deliver the data to a remote computer. Networks comprised of multiple bricks could monitor a building's structural stability during a fire, earthquake or other disaster as well as identify walls in need of repair. Before the smart bricks make it into residential and commercial buildings, researchers want to compress the components onto a single chip adhered to flexible plastic to achieve versatility and resilience. White Beadboard Making a ComebackWhite-painted beadboard is making a comeback, driven by America's rekindled fondness for beach houses. The old-fashioned moldings with rounded edges were commonly used to panel the porches of seaside cottages in the 19th century. Now, however, the wall coverings are being applied elsewhere — including ceilings, cabinet doors and wainscoting. Designers say that while the look is nostalgic, achieving it is more efficient now that large panels with the beadboard design stamped on the surface are available. Previously, the planks had to be installed one by one. Upstairs Laundry Rooms Gain PopularityThe typical clothes washload takes two hours to complete, and more and more builders are facilitating the process for home buyers by moving laundry rooms out of the basement and closer to bedrooms. In addition to convenience, first- and second-floor laundry facilities also enhance a property's resale value. Residents of existing properties can take advantage of this trend as well. Those interested in relocating their washrooms are urged to hire a contractor with knowledge of the local building codes to handle plumbing and ventilation. Before undertaking such a project, they should ensure that there is plenty of space to accommodate the washer and dryer, shelves, a sorting and folding station, and an ironing board. Ideally, the laundry room should be situated near existing plumbing and wiring, with plenty of lighting and ground fault circuit interrupter outlets to turn off the machines if moisture is detected. Strong flooring, wide doorways, moisture-resistant greenboard and soundproof walls also are recommended. Baby Boomers Flock to Active-Adult CommunitiesYounger baby boomers are flocking to Sacramento, CA, to take advantage of active-adult communities. There already are six or so such developments planned for the area, and another 1,800-2,000 units per year could be built by the end of the decade to meet demand. Today's retirees are opting for developments with fitness centers, walking trails, swimming pools, wellness centers, plenty of activities and scores of high-tech features over standard amenities such as golf and shuffleboard. Experts say they are living and working longer, even launching second careers as they reach the traditional retirement age. Many 40-something baby boomers also are making second-home purchases, traveling and having plastic surgery; and they tend to desire homes near the urban core in close proximity to entertainment venues. Their older counterparts, however, prefer suburban locales with resort amenities. With many homes in active-adult communities inching past the $300,000 mark, developers are turning their attention to reasonably priced, age-restricted rentals. They also are beginning to cater to buyers who prefer a smaller, more closely knit residential environment. Home Demand Rebounded in JulyA recent Market News polling of the nation's home builders has painted a mostly positive picture of the housing market's current state, as residential real estate has been immune to the summer slowdown. Home prices have continued to climb — especially with supply remaining lean as a result of growth restrictions in many markets and demand still so high. In addition, mortgage rates have settled down from their earlier volatility to decline in the first part of the current month. Even With Condos Hot, Incentives Help SalesSouth Florida's condominium market is hot, with buyers willing to camp out to secure a spot when sales open up in the most desirable projects. The average price of these units is rising to meet demand, soaring 24% to $171,731 in Fort Lauderdale during the year-over-year period ended in July. Even with the market sizzling like it is, developers are offering numerous incentives to lure both buyers and brokers, ranging from free upgrades and retail discount cards for buyers to extra compensation for brokers. Though many people associate incentives with desperation, experts say developers want to quickly unload their units to save on marketing costs; generate interest during the summer months, when activity traditionally slows; and avoid going over budget. "It's true that incentives that are not necessary usually indicate that a potential project might be selling slower than it is or that there is something wrong," remarks Fortune International Development President Edgardo De Fortuna. "But I come from a brokerage background, and I think my most important assets are the brokers that are promoting and selling my project, so any time I can do something for them to create loyalty and awareness of our product, I will." Women, Minorities Loom Large in Housing Industry, Study SaysThe residential property industry is likely to have another strong decade as household growth runs 10% higher than initially estimated to 13 million from 2005 to 2015, according to a new report from Harvard University's Joint Center for Housing Studies. Woman will have a larger influence on the market as two-income households and female households continue to grow; and another factor will be an increase in minority homeownership, which is expected to soar to 34% by 2020. "Largely as a result of immigration, minorities accounted for 27% of households in 2003 and will contribute at least two-thirds of net household growth in the coming decades," according to a statement by Nicolas P. Retsinas, director of the Joint Center for Housing Studies. The new study also notes that the impact of rising home prices has been lessened by low interest rates; however, the supply of housing will come under pressure to keep apace of demand. Eco-Friendly Homes Blossom in LandscapeGreen building is catching on among home builders, who constructed a total of 13,739 such dwellings across the country last year. In comparison, less than 19,000 green homes were erected from 1990 to 2001. The Florida Green Building Coalition certified 76 green homes statewide during the past four years and will put its seal of approval on another 120 structures in 2004 alone. The concept is gaining popularity with the emergence of cheaper environmentally friendly, energy-efficient products; and builders are even constructing models to market these green features. In Orlando, for example, Bradford Building Corp. is erecting the Not So Big Showhouse, which merges energy-efficient components with architect Sarah Susanka's scaled-down design concepts. The residence will boast structured insulated panels; energy-efficient windows; a solar water heater; a photovoltaic system; and faucets, toilets, and an irrigation system that conserve water. Owners of green homes benefit from lower utility bills, fewer maintenance tasks and improved indoor-air quality. According to NAHB, more than two dozen regional green building programs are in place nationwide. Housing Turns to TechnologyMore builders in Southern California are expected to switch from wood frames to insulated concrete forms, which are polystyrene blocks filled with concrete. Development of a subdivision in Cathedral City, where 160 homes are being built with insulated concrete forms, has drawn attention to the new technology. Insulated concrete forms shave 30%-50% off a home's energy bill; block outside noise; prevent mold growth; and accelerates the construction process. In addition, the material is strong enough to comply with the state's earthquake-safety rules and at the same time accommodate bigger windows and doorways. Commercial developers are expected to embrace the technology as well in an effort to slash energy costs. The homes in the Cathedral City project, the Villages at Rio Del Sol, will command anywhere from $600,000 to $1 million apiece. Tax-Credit Study: Yields on Par, Foreclosure Levels Remain LowErnst & Young LLP's newly issued study of tax-credit investors and syndicators found that investments in low-income-housing tax-credit projects have been performing in line with earlier yield forecasts. For the report, E&Y researchers examined 2002 operating data on more than 7,000 such properties representing almost $15 billion worth of equity investment since 1987, holding it up against the results of a previous study of operating data from the year 2000. Among other findings, E&Y determined that foreclosure rates remained low at about 0.01%. Occupancy was stable, meanwhile, at an average 95% across the board — although smaller properties routinely were outperformed by large properties, and rural properties — which are typically small — did not do nearly as well as urban properties. Electric Ranges Lick Kitchen HeatGeneral Electric engineers report that electric ranges reduce the temperature in kitchens by 8-16 degrees compared to homes equipped with conventional ranges. In addition, kitchens with conventional flame-burning ranges require air conditioning units to eliminate the temperature difference, which would increase the user's monthly energy bill by roughly $2.10. The United States Department of Agriculture also states that electric cooking is cooler after conducting tests comparing the performance of cooking methods under laboratory conditions. Tests compared flame-burning rangers to electric rangers when cooking identical meals. The tests indicated that flame-burning ranges required 29,980 heat units to cook meals compared to the15,026 heat units used by electric ranges. Expert Advice on VOIPSome small to mid-size businesses (SMBs) can significantly cut their communications costs by adopting Voice Over Internet Protocol (VOIP), but CDW Senior Sales Engineer Bryan Cohen urges those that cannot achieve cost savings to stick with traditional PBX phone systems. He explains, "Essentially, VOIP is a compromise of features and cost versus reliability." There are different types of VOIP systems, and SMBs should choose the one that best fits their needs. Companies that make a lot of intra-office and customer calls might want to consider a basic LAN-based VOIP system that facilitates the process of adding and removing phones and relocating from one office space to another. WAN-based VOIP is a good choice for SMBs with offices in different calling areas, allowing them to slash their long-distance telephone bills. Before implementing VOIP, Cohen urges them to update their network switches and routers to support the QoS (Quality of Service) standard to keep words in the proper order during transmission and ensure that voice calls are not disrupted by data exchanges. SMBs must also implement systems that immediately restart the network after a crash; provide employee training; and make sure the vendor will service the system when necessary. Document Imaging Helps Increase Office Productivity and SecurityDocument imaging systems, comprised of high-speed scanners and imaging software, enhance both productivity and security. These solutions either store pieces of data or entire documents. Data capture solutions eliminate time-consuming data-entry tasks, while document capture solutions offer speedy access to complete files. Productivity losses tied to the wait for paper documents total about $4,500 per worker per year. Document capture solves this problem, as well as reduces the chances of losing or misplacing important files. In terms of security, document imaging systems allow files to be stored at remote locations. The documents can easily be called up and reprinted if the main office is destroyed by fire or natural disaster. Calls for Lifting Mexican Cement Tariffs Intensify as Florida Prepares to RebuildIn the news media last week, there was a rising chorus of support for an NAHB proposal calling on U.S. Commerce Secretary Donald Evans to scrap tariffs on Mexican cement needed to fill shortages of the material that first appeared in Florida and the Southeast this spring and have since spread to more than half the states in the country. There is no short-term relief to the problem in sight, analysts in the cement industry say, and concerns have intensified in Florida, where residents face a massive rebuilding effort following the ravages of Hurricane Charley and cement is a key building material that will be needed. The devastating storm that pounded Southwest Florida with unexpectedly high winds two weekends ago has sharpened the national focus on the rupture in the cement pipeline that has largely resulted from heavy demand for materials and shipping from China. The U.S. has been importing about 20% of its cement, and the shortages have fallen heaviest upon Florida and other parts of the country that have been especially reliant on those imports. An Aug. 22 report from Bloomberg News quotes Mike Hickman, president of the Florida Home Builders Association, that even before Charley cement shortages were delaying projects and adding one month onto the average amount of time it was taking to build a new home. The state has been relying on imports for 40% of the 7.2 million tons of cement it uses annually. Exacerbating the problem has been the steady demand for cement from home building activity, which remains near record levels. Voicing the frustration of home builders that Mexico could bring fairly swift relief except that anti-dumping duties are making its cement prohibitively expensive, NAHB Executive Vice President Jerry Howard appeared in major news outlets last week, including CNN, National Public Radio, Bloomberg and USA Today. The NAHB Senior Officers are continuing to urge the Administration to lift the cement tariffs. Joining that appeal from NAHB was an Aug. 18 editorial by The Wall Street Journal observing that, “The Bush Administration is busy passing out checks to help Floridians rebuild after Hurricane Charley, a gesture that no doubt is appreciated. There is, however, another way it could support the reconstruction effort, and at considerably lower cost: Restore free trade in Mexican cement after 14 years of protectionism.” An editorial in The Los Angeles Times the same day deplored shortages of several building materials — including wallboard, steel, framing lumber and insulation — that NAHB economists have calculated are driving up the cost of a typical new home by an average of $5,000-$7,000. “Yet at least when it comes to cement,” the editorial noted, “it’s a relatively simple problem to solve. Congress and the Bush Administration should rescind the costly anti-dumping duties imposed on Mexican cement in 1990.” Editors at The Times added that “rising cement prices mean businesses and consumers face higher construction costs, so they have less money to spend on other products or on hiring more workers. Florida’s storm victims shouldn’t end up suffering more as the government protects an industry to their and most other Americans’ detriment.” An Aug. 21 editorial iin the Orlando Sentinel said: "The Federal Emergency Management Agency has launched an extensive effort to help Floridians get back on their feet after Charley. But a truly comprehensive campaign from Washington to aid hurricane victims also would include a lifting of the cement tariffs." Housing SnapshotMortgage interest rates continued to soften slightly last week as the financial markets attempted to make sense of recent statistics providing both good and bad news for the nation's economy. Oil prices, climbing close to $50 a barrel, provided cause for concern. Morgan Stanley economist Stephen Roach cautioned that the nation will lapse back into recession if oil prices remain at that level for the next three to six months, although nobody is predicting that they will. Also in the negative column, the Conference Board reported last week that its composite index of leading economic indicators was down 0.3% in July, following a 0.1% drop in June. Good news came from the Consumer Price Index, which was down in July, and the Federal Reserve's report of output from factories, mines and utilities, which was up. The best news of all came from housing starts, which were just under the 2 million annual level last month. Developments on the lumber price front last week continued in the negative direction for home builders, although the cost of framing lumber declined by $1 to $473 per 1,000 board feet, according to Random Lengths. The price of 15/32-inch 3-ply southern (west-east) exterior sheathing continued to rise, reaching $435 per 1,000 board feet, up $30 from the previous week. Oriented strand board rose $10, to $395. The price declines in those building staples of earlier this summer are becoming an increasingly distant memory. Mortgage Interest Rates30 Year Fixed Rate: 5.81\% Housing Starts: Jul. 2004Total: 1.978 million\% New Home Sales: Jun. 2004 *1.326 million Existing Home Sales: Jun. 2004 *6.95 million * Seasonally Adjusted Annual Rate Please Take the Time to Help Us Solve the GLI CrisisFellow builders, it’s time for action. It’s time for us to fill out our general liability insurance (GLI) surveys and send in our consent letters. It’s time for each of us to do our part to help solve the home building industry’s GLI crisis. Recent surveys show that GLI is our members’ number one concern. It’s easy to see why. GLI premiums have risen 10-fold in some areas. Many policies have so many exclusions that the coverage is ineffective. And in some states, it’s almost impossible to get any GLI coverage at all. NAHB members have made it clear that they want the federation to do something to solve this GLI problem. In response, NAHB has entered into a strategic partnership with Marsh, the insurance and consulting firm, to gather loss information about the residential construction industry, to analyze that data to better understand the industry’s risk management needs and to use that analysis to develop new, cost-effective GLI products. Last month NAHB and Marsh sent an eight-page mail piece to 55,000 builder, remodeler and trade contractor members. The mailer included a survey, a model consent letter giving insurance carriers permission to share a builder’s loss information with Marsh, and information about NAHB’s GLI initiative. If you didn’t receive the mailing, you can find the survey, model consent letter and other information at www.nahb.org/gli. It seems to me that anyone who recognizes that our industry is experiencing a GLI crisis ought to take half an hour to fill out the survey and send in the consent letter. If you need help with the survey, ask your insurance agent for assistance. You can find additional information about this initiative at www.nahb.org/gli. If you want to speak to someone at NAHB, please contact Clayton Traylor at 800-368-5242 x8490 or Brett Diggs at x8453. If you need a copy of the survey and the model consent letter, you can find them on NAHB’s web site or you can call Blake Smith at x8583. If GLI costs are eating into your profits, then please participate in this effort. If you’re “flying solo” — doing business without any GLI coverage — then please participate in this effort. If you’re worried about how much your premiums will rise the next time you have to renew your coverage, then please participate in this effort. Please don’t put this off. For many builders, we’re talking about thousands of dollars per year. We’re talking about the stability of your business. We’re talking about the long-term strength of our industry. Take an hour and make a difference for your business and the home building industry. It’s time for action. Housing Starts Surge in July as Builders Try to Keep Up With DemandHousing starts remained remarkably healthy in July, increasing 8.3% to a seasonably adjusted annual rate of 1.978 million units, the U.S. Commerce Department reported last week, putting the rate of new residential construction 4.5% ahead of its pace a year earlier. “Builders remain confident about the market and expect to maintain a healthy pace through the coming months as we strive to keep up with strong demand for single-family homes and condominiums” said NAHB President Bobby Rayburn. “Favorable market conditions continue to bode well for housing,” said NAHB economist Michael Carliner. “Mortgage rates remain extremely attractive on an historical basis and with house price performance remaining solid and continued increases in household formations, we expect housing to remain strong.” Single-family housing starts increased 8.5% in July to a rate of 1.651 million, 7.5% higher than a year earlier. Multifamily units were started at a seasonally adjusted rate of 327,000 units, increasing 7.5% from June and 8.4% from a year earlier. Construction of new homes and apartments in July increased 15.8% in the West, 15.7% in the Northeast and 4.3% in both the Midwest and South. “Builders are positioned quite well. Inventories remain lean, there’s a sizeable backlog of unfilled orders and buyer demand promises to remain strong,” said Carliner. Lower Mortgage Rates a Boost for Builder Confidence in AugustDeclining mortgage interest rates helped boost builders’ confidence in the market for new single-family homes this month, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). The index rose to 71 for August, up four points from July’s revised number and the same level it was a year earlier. NAHB President Bobby Rayburn said that a decline in mortgage interest rates — from 6.29% in June to 6.05% in July and below 6% this month — “undoubtedly helped push builder optimism to its highest level since October of 2003 as potential buyers who might have been sitting it out started diving back into the market when rates headed downward.” Citing a favorable climate for home finance and solid house-price performance, Rayburn added that, “We have good reason to expect continued strength in the housing market in the months ahead.” The HMI is derived from a monthly survey of builders that NAHB has been conducting for almost 20 years. Home builders are asked to rate current sales of single-family homes, their expectations of sales for the next six months and traffic of prospective buyers. Those component indexes all rose in August — to 76, 78 and 57, respectively. Any number over 50 indicates that more builders view sales conditions as good than poor. The index for this month found that builders were the most optimistic they have been since last November about prospects for sales over the next half-year. And the index for prospective traffic reached its second highest level ever. Spotlight on: Jacksonville, FLLocal HBA: By Greg Matovina, President of the Northeast Florida BA Vital Stats:
Outlook for 2004: Year-to-date, we’re running ahead of last year’s all-time record for home building. In fact, 2004 could turn out to be our third consecutive record-breaking year. The housing market is definitely strong, particularly compared to other sectors. To date, we’ve logged about 7,034 starts — which means we’re headed to about 14,000, if that rate is sustainable — and we think it is. As far as which areas of the market are excelling, they’re all showing about the same strength. It used to be almost unheard of to have a million-dollar home in our Parade of Homes, but now it’s pretty balanced across the board — high-end, mid-range and starter homes are all very popular. The rental side of the market is probably a bit softer. Biggest Source of Concern for Builders: One issue that’s front-and-center is very much a state issue — it’s workman’s compensation insurance. Many insurers have pulled out of the market, so it’s a challenge for local builders to get adequate coverage for that. On the other hand, General Liability Insurance — which has been in short supply elsewhere — is available here thanks to the efforts of our state association. Another big concern is the increasing scarcity of land to build on. Finished lots (in any number) are getting tough to come by. It seems all the big national builders are here now — three or four have arrived just in the last year, including Lennar and others that were rumored to be coming in over the last five years. They’ve finally made it. Before, we never had anyone do over 1,000 homes — but now, both D.R. Horton and KB Home have built that many. And we have some big Planned Unit Development (PUD) projects coming out now. What’s happening is that big-name, national builders are coming to the market by buying up well-known local builders that have significant land holdings. They’re making them offers they can’t refuse. Market Trends: Our two big trends going on right now are “lofts and condos” and golf communities. We’re seeing older buildings being rehabbed as lofts downtown, and of course condos are not uncommon due to our beach location. And for golf-related developments, we’re now practically rivaling Hilton Head, SC.
Mark Your Calendar for NAHB's Fall Construction Forecast Conference Get the latest forecasts on housing starts, project budgets and other economic bellwethers of the housing industry at NAHB's Fall Construction Forecast Conference at the National Housing Center in Washington, D.C. on Oct. 27. Click here for more information. Diversify Your Custom Home Business Now, When the Market Is HotDiversification may not be on most custom builders’ minds today with the housing market enjoying its strongest sales in a decade. All of us are running flat out, and just working with customers and building homes quickly chews through the day. Now, however, is exactly the right time to diversify your business. You have the sales, the profits and the cash flow to build in some flexibility. When the market turns — and it will — diversifying will be the last thing on your mind. Consider Adding Remodeling Services For a custom builder, remodeling is the best initial diversification. It’s close enough to custom building that your skills can transfer. Yet it differs enough so you don’t suffer from the same bone-jarring cycles. Additionally, remodeling is another way to get your name in front of your target market — and that can actually increase your home building business. Our company has combined remodeling and custom home building for several years. We have won many new custom home customers through our remodeling work. When the housing market slowed in 1995, our remodeling jobs kept us busy. In some years, remodeling has accounted for as much as 75% of our revenues; in other years, less than 25%. Same Cycles as Home Building, But Less Severe For many years, industry analysts believed that remodeling was counter-cyclical to home building: when building was up, remodeling was down and vice versa. In reality, remodeling follows the same cycle as home building, but its ups and downs are not nearly as severe. In other words, when housing crashes, remodeling only dips. Remodeling provides a cushion for a custom building operation and reduces the latter’s inherent risk. Remodeling is also growing faster than housing. According to several forecasts, total dollars spent on remodeling will exceed new construction dollars. And the gap will only get wider. Remodeling will soon offer more opportunities than building. Here are some more advantages of the home improvement business:
In addition, I enjoy the different challenges posed by remodeling and find that the lessons I learn in one discipline often help me in the other. Key Points to Consider Before Getting Into Remodeling For all its positive attributes, remodeling does have some hazards. Before getting into remodeling, you need to make sure it’s a good fit for your business and, if so, put it into your business plan. Keep these considerations in mind:
For these reasons, I believe you have to be a better builder to become a successful remodeler. Remodeling poses some substantial challenges, but the positives far outweigh the negatives for custom home builders. For more information about the remodeling business, contact your local HBA’s Remodelors™ Council or NAHB’s Remodelors™ Council. Stephen K. Hann is president and CEO of Hann Builders in Stafford, TX. He is a longtime contributor to NAHB’s Custom Home Builders Committee and is 2004 chairman of the Custom Builder Symposium Subcommittee.
Run Your Business Better and More Profitably Click www.nahb.org/biztools to access hundreds of timesaving, moneymaking and cost-cutting resources. You’ll find guidance in a concise, easy-to-read format on topics like financial management, production, sales and marketing, customer service and human resources … to name just a few. Plus, get answers to your tough questions about how to use software to improve your bottom line in the Talk About Business & IT section. Attend the 2005 Custom Builder Symposium Expand your knowledge “Beyond the Tool Belt” at this year’s Custom Builder Symposium. This is the one event where custom builders can go for world-class education and exceptional networking opportunities. For more information, click here. Build Smarter, Earn More by 'Pricing for Profits'Does pricing your homes involve more guesswork than knowledge of the actual costs and profits you should be making? Attend Pricing for Profits, a new seminar offered by The NAHB University of Housing, to learn how to build homes with dead-on cost estimates and budgets. Instructor Mitch Cohen, a consultant with The Lumin Group and a former industry executive who negotiated labor and materials prices for one of the largest builders in the country, will guide attendees through a proven, simple-to-use financial model he developed expressly for home builders. Pricing for Profits will be held:
Pricing for Profits will give you a better understanding of how costing homes accurately is crucial to earning profits, as well as increase your confidence in your sales prices. The seminar will enable you to immediately use what you’ve learned to simplify and standardize the financial costs of every home you build — and make more money on each. Future Pricing for Profits Seminars Can’t attend Pricing for Profits at the fall board of directors meeting? Pricing for Profits seminars will also be held:
Visit Pricing for Profits to learn more and to register, or call NAHB’s Office of the Registrar at 800-368-5242 x8338 for more information. Tips to Manage the ‘People Part’ of Your Business on NAHB's Web Site“Where can I find labor?” “How much should I pay my production manager?” “What should I do if someone’s taking money from the till?” NAHB’s Business Management Department gets questions like these all the time, so it developed a new section in Business Management Tools on the NAHB Web site — Human Resource Management Tools — to help members manage the “people part” of their business and develop motivated, productive employees. Human Resource Management Tools features articles on communication and leadership, incentive plans, managing your labor burden, succession planning, teamwork and other topics. Soon, additional resources — including links to books on compensation, job descriptions and managing your employees — will be included. Whether you have a human resources department or handle employee issues yourself, bookmark Human Resource Management Tools for tools and tips on managing one of your company’s most valuable assets.
'Managing Your Most Difficult Customers' Available at BuilderBooks.com Good customer care means happier customers and increased referrals. It's now easier than ever for disgruntled home owners to voice their discontent. Stop bad press before it starts by making every employee accountable for good customer care. Learn how to make every customer a happy customer with "Managing Your Most Difficult Customers," available at BuilderBooks.com. To view or purchase this publication online, click here, or call 800-223-2665 to order. The NAHB University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Build Your Knowledge at the Custom Builder SymposiumCustom home clients continually raise the bar on what they expect from their builders and their finished home. The 2004 Custom Builder Symposium gives custom builders the opportunity to expand their knowledge base, deliver on their clients’ expectations and ensure profitability. The symposium will be held Nov. 12-14 at the Renaissance Esmeralda Resort and Spa in Indian Wells, CA. The theme this year is “Beyond the Tool Belt.” New this year:
How to Maximize Option Sales in Your Active Adult CommunitiesSelling homes to the active adult market offers both high risk…and tremendous profit potential. Builders who aren’t really “on top of their game” soon will find that active adults are quick to point out broken promises, inaccurate or incomplete information, subpar customer service and the slightest construction defect — and that’s just for starters. These buyers have the time and the desire to be involved in every facet of the home buying experience. On the flip side, they generally are very loyal, and if you win their trust, they will stand behind you and sing your praises. They are smart, interested and willing to spend money to create their dream home. In moderate- to higher-priced markets, active adult buyers will spend substantially more option dollars than their younger counterparts in the same price range. With that in mind, here’s my list of the top seven mistakes builders must avoid when selling options to the active adult market:
Builders of all sizes are beginning to understand the importance of design centers. The goal is to ensure that your design center experience delights your customers and substantially improves your profits at the same time. Jane Meagher is the president of Success Strategies, a Manalapan, NJ-based marketing consulting firm dedicated to standardizing and streamlining builders' options programs and developing and improving design center environments. Meagher is an active member of the NAHB Seniors Housing Council and has spoken at Building for Boomers & Beyond: Seniors Housing Symposium. For more information, e-mail Meagher, visit her Web site at www.opt4success.net or call her at 732-761-8134.
Attend the 2005 Seniors Housing Symposium in Metro Washington, D.C. Area Do you want to learn more about the fastest-growing segment of the housing market? Make your plans to attend Building for Boomers & Beyond: Seniors Housing Symposium 2005, the premier educational and networking event for industry professionals who serve the burgeoning 50+ market. For more information, click here. Learn More About Seniors Housing Through the Seniors Housing Council To learn more about seniors housing, join the NAHB Seniors Housing Council. The council provides information, education, networking and recognition opportunities for its members and represents NAHB on seniors housing issues. For more details, e-mail Jeff Jenkins or call him at 800-368-5242 x8292. Enter the 2005 Best of Seniors Housing AwardsEnter your community design, clubhouse, models or marketing and merchandising in the 2005 Best of Seniors Housing Awards competition. The competition has more than 100 categories to choose from, including active adult, assisted living, continuing care retirement community, congregate care community, renovated seniors housing, special needs housing, seniors multifamily and more. For details, visit Call for Entries, or call 800-368-5242 x8220.
'The Best of Seniors Housing News' Available at BuilderBooks.com "The Best of Seniors Housing News," available at BuilderBooks.com, is a compilation of up-to-date, informative articles gleaned from Seniors Housing News. From design ideas to customer service, you’ll learn the unique vantage points that will keep you ahead and give you an edge in the seniors housing market. To view or purchase this publication online, click here, or call 800-223-2665 to order. Attend the 2005 Seniors Housing Symposium in Metro Washington, D.C. Area Do you want to learn more about the fastest-growing segment of the housing market? Make your plans to attend Building for Boomers & Beyond: Seniors Housing Symposium 2005, the premier educational and networking event for industry professionals who serve the burgeoning 50+ market. For more information, click here. Learn More About Seniors Housing Through the Seniors Housing Council To learn more about seniors housing, join the NAHB Seniors Housing Council. The council provides information, education, networking and recognition opportunities for its members and represents NAHB on seniors housing issues. For more details, e-mail Jeff Jenkins or call him at 800-368-5242 x8292. HUD Proposes Drastic Changes for 2005 Fair Market RentsThe Department of Housing and Urban Development has proposed Fair Market Rents (FMRs) for 2005 that represent significant changes, both up and down, from their levels for the current year. The changes came largely as the result of new methodology for calculating the rents that ignored recommendations from NAHB. The FMRs dropped in more than 750 cases across the country, but rose in others. The largest declines were concentrated in the New England states. The most notable increase took place in San Benito County, CA, where the FMR jumped from $864 to $1,759. Fair Market Rents — which are calculated annually to reflect what it costs to rent “modest, safe and healthy housing” in specific counties and metro areas — are used in a number of tenant-assisted programs, including Section 8 and HOME. HUD is required to publish final FMRs for next year by Oct. 1, but it recognizes that adjustments may be needed in some areas. It is working to get better information, which won’t be received in time for that deadline, so a second round of “final” rents will be published after that date. NAHB is submitting comments, which are due by Sept. 7. Comments from builders and developers may be more carefully considered this year because of the new methods that have allowed FMRs to change so drastically from one year to the next. For the full story, which includes guidance on comments and the address to which they should be sent, click here. For more specific information, e-mail David Ledford at NAHB or call him at 800-368-5242 x8265. HUD Report on Accessibility Requirements Raises Compliance ConcernsA preliminary review of a draft report from the Department of Housing and Urban Development has identified nine provisions in the 2003 International Building Code (IBC) that the agency claims do not meet the accessibility requirements of the Fair Housing Act. This is a disturbing finding for multifamily builders, because it jeopardizes the effort to endorse the 2003 edition of the International Building Code as providing a “safe harbor” for compliance with those requirements. NAHB worked diligently with HUD to secure the safe harbor endorsement of the 2000 edition of the IBC, which has been widely adopted and is working as an effective vehicle for compliance. The association considers endorsement of the 2003 edition, which is now being adopted by many localities, equally critical. Without the endorsement, builders and designers can’t verify that they are in compliance and will be exposed to costly legal action in which the courts would have to determine whether they met federal accessibility requirements. Under the act, all new multifamily dwellings with four or more units, whether for rent or sale, constructed for first occupancy on or after March 13, 1991, must meet certain design and construction requirements to make them accessible to people with disabilities. Covered units include all ground-floor units in buildings without elevators; all units in buildings with elevators; single-story townhouses; and all indoor and outdoor common-use areas. NAHB currently is reviewing the report in detail and will be meeting with HUD, in addition to submitting formal comments, to resolve any obstacles to endorsing the 2003 code as a safe harbor. HUD is accepting public comments on the report until Sept. 7. To read the report, click here. For additional information, e-mail Jeff Inks at NAHB, or call him at 800-368-5242 x8547. More Builders Needed to Serve on Housing Finance Agency BoardsHome builders have the opportunity to help develop and administer affordable multifamily and single-family housing programs by serving on their state housing finance agency (HFA) board of directors. While some states have laws requiring builder representation on these boards, others do not. Created in 2002 to correct this oversight, NAHB’s State Housing Finance Agency Directors Working Group has developed model legislation requiring the governor to appoint at least one builder to the HFA board from a list submitted by the state's home builders association. (Further information in the links above is available to NAHB members only who have logged onto the NAHB Web site.) In addition to increasing the number of NAHB members on HFA boards, the working group:
The NAHB State Housing Finance Agency Directors Working Group will meet during the Fall Board of Directors Meeting on Sept. 30 from 4:00-5:30 p.m. in the Franklin A room, which is located on the second floor of the Hyatt in Columbus, OH. All members and HBA staff are welcome to attend this meeting. For more information on NAHB's efforts in this area, association members can go to www.nahb.org and type “housing finance agency” in the search field. Or e-mail Bill Renner, or call him at 800-368-5242 x8597. Chicago Builders to Renovate Home for HUD’s Homewise ProgramThe Remodelors™ Council of the Home Builders Association of Greater Chicago (HBAGC) earlier this month announced plans to participate in the renovation of a house in the Department of Housing and Urban Development's Homewise initiative, a national pilot program designed to encourage counseling for prospective home buyers. “We are dedicated to making this renovation a reality,” said Dan Griffin, president of the HBAGC’s Remodelors™ Council. “Our council members believe the Homewise program presents an effective educational opportunity that can eventually lead many lower-income families to homeownership.” Members of the council will donate time, money, labor and products to the renovation of the home, which is located at 1418 W. 77th Street in Chicago. In-kind donations from project partners also will be used in the renovation. Once restored, the house will be sold at 50% of its value to a randomly selected family that is buying its first home, has completed an approved housing counseling course and whose income does not exceed $55,680. (Interested households can apply through the end of this month. For further information and an application, click here, or call 888-297-8685.) HUD is encouraging counseling to help households buy a home and keep it during difficult times. Educated buyers are also less likely to be victimized by predatory lenders, HUD says. During the national rollout of Homewise, homes are being renovated in 10 cities around the country. Griffin said that his council hopes to complete renovations to the Chicago house by early October. Partners with HUD in the Homewise program include NAHB and its affiliated local associations and councils; the National Housing Endowment, the philanthropic arm of NAHB; Wells Fargo Home Mortgage; Fannie Mae; and Freddie Mac. For more information on the Chicago project, e-mail Julia Roberts at the Home Builders Association of Greater Chicago, or call her at 630-627-7575.
The NAHB University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Use Professional Design to Create a New Profit CenterBob Peterson, CGR, CAPS In fact, we have been very successful in making design an integral part of our profit and loss (P&L). Time and again, whenever we properly develop and present professional designs to our clients, it adds to our bottom line. If you want to promote and make design a profit center for your business, be aware of these key issues:
If you listen, are professional, provide professional documents and show your clients that their project will be more successful if you can include clear details and professional plans, it is easy to sell profitable design. Professional Design Can Ace Your Competition Oftentimes, when we know there is competition for a job, we first sell the prospect our design. This ensures that each competitive company prices the same details and levels the playing field. Actually, it often ends up tilting the playing field in our favor. In the process of developing and presenting the design, we do all we can to earn our clients’ respect and confidence so that, by the time construction pricing comes around, we’ve eliminated the competition. So turn design into an important part of your business. It never hurts to have a line item in your P&L showing a much higher gross profit than the construction itself. Bob Peterson, CGR, CAPS, is president of ABD, Ltd. of Ft. Collins, CO. He has been in the home building/remodeling industry for more than 30 years and was named Remodelor™ of the Year in 1997 and Builder of the Year in 1999 by the Colorado Association of Home Builders. E-mail Peterson for more information.
Nominate the Best of the Best for Remodelor™ of the Year — Deadline, Sept. 3 Applications for the Remodelors™ Council’s most prestigious awards program, the Remodelor™ of the Year Award, are now available online at www.nahb.org/remodelors under the Awards section. The deadline for applications is Sept. 3. The Remodelor™ of the Year Award recognizes exemplary NAHB involvement at any level, superior business management and an outstanding contribution to the remodeling industry. Councils should nominate individual remodelers, but the nominee must write his or her own entry essay. The winner will be announced at the Remodelors™ Council Gala during the 2004 Remodeling Show in Chicago (Oct. 8). Local Councils Honored With CADRE Awards The Council Awards for Demonstrating Remodeling Excellence (CADRE) is awarded to local Remodelors™ Councils for superior member service in the categories of:
The deadline for entries is Sept. 3. For information, e-mail the Remodelors™ Council or call 800-368-5242 x8216. 'Creating the Not So Big House' Available at BuilderBooks.com "Creating the Not So Big House," available at BuilderBooks.com, focuses on key design strategies for creating a house that values quality over quantity and emphasizes comfort, beauty, a high level of detail and a floor plan designed for today's informal lifestyle. The publication features an up-close look at 25 houses from all over the country — from a tiny New York apartment to a Southwestern adobe, a traditional Minnesota farmhouse and a cottage community in the Pacific Northwest. To view or purchase "Creating the Not So Big House" online, click here, or call 800-223-2665 to order. The NAHB University of Housing Offers Courses and Designation Programs The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here. Attend the 2005 Custom Builder Symposium Expand your knowledge “Beyond the Tool Belt” at this year’s Custom Builder Symposium. This is the one event where custom builders can go for world-class education and exceptional networking opportunities. For more information, click here. Closing for CowardsHow is it that commitments, even the ones that bring us great rewards, are often laced with fear and trepidation? That fearfulness explains why, when it comes to closing a sale, it’s not unusual for the buyer and seller to dance around their uncertainties until one of them acquiesces and finally says, “Okay, what’s next?” Intuitively, we know there’s a big difference between talking about commitment and making or asking for one. Yet, whether we are asking for one or being asked to make one, we often apply the same emotional brakes. Mastering our fear by stealthily closing the customer with another new technique is out of place in today’s market. Today’s buyers insist that we earn their commitment. Consequently, earning their commitment enables us to overcome our own closing fears. I find that commitments are successfully earned by accompanying customers through four key steps that ultimately lead to closing the sale. Skip just one and you reduce your chances of a successful outcome. The astute new home agent who recognizes the value of each step will find that commitments come without undue pressure and produce a less fearful, more enjoyable experience for both buyer and seller.
Identify the customer’s profile, solve his or her problem, build credibility and maintain on-par commitments. When you’re done, you’ll be amazed at how much you’ve accomplished — and how much of your fear and trepidation has given way to success. Mark Barnard, MIRM is an on-site sales professional in the Atlanta market. For information, e-mail him at barnardptc@hotmail.com. Barnard is also a previous contributor to Closer's Corner, a recurring feature in Sales + Marketing Ideas magazine. Originally published in NAHB’s Sales + Marketing Ideas magazine.©2004.
Subscribe to Sales + Marketing Ideas Magazine for Cutting-Edges Information For additional cutting-edge sales and marketing information, subscribe to NAHB’s Sales + Marketing Ideas magazine. Call 800-368-5242 x8192 or visit www.smimagazine.com to subscribe or order a copy. Click here to learn about membership benefits of the National Sales and Marketing Council and the Institute of Residential Marketing. Residential Marketing Courses and Designation Programs for Sales & Marketing Professionals The Institute of Residential Marketing (IRM) offers four designation programs for sales and marketing professionals:
For more information on these designation programs, click here or call 800-368-5242 x8192. To locate a MIRM in your state, visit www.nahb.org/MIRM. BuilderBooks.com Offers Sales and Marketing Publications Online BuilderBooks.com offers a variety of sales and marketing publications online. To view or purchase these publications, click here. British Home Buyers Keen on Environmentally Sustainable HousingHome buyers in Great Britain are very much in the market for environmentally friendly housing, according to recent polling by a public organization in that country. Eighty-seven percent of those surveyed last month said that they want information on the environmental performance of housing that they are considering purchasing, and 84% indicated that they would be willing to pay a 2% premium for an environmentally sound home. The list of eco-friendly features that British buyers said were important included:
Research from WWF (World Wildlife Fund), which is conducting a One Million Sustainable Homes campaign, has found that British home owners can see a 30%-40% reduction in their utility costs with only a small increase in construction costs. WWF began its campaign to provide more people with the option to buy homes that are healthier, safer and cheaper as well as beneficial to the environment in August 2002 at the World Summit on Sustainable Development in Johannesburg, South Africa. It is aiming at meeting its goal by 2012 through new construction and retrofitting. Two other groups also participated in the recent survey — CABE (the Commission for Architecture and the Environment), which the government set up in 1999 to encourage the development of well-designed homes, streets, parks, offices, hospitals and other public buildings through public campaigns and support to industry professionals; and Halifax, whose parent company HBOS plc, in a partner in the One Million Sustainable Homes campaign and the largest mortgage lender in the U.K. “This research provides powerful evidence of a growing concern about environmental and design issues,” said Paul King, who is the director of the sustainable home campaign. “People understand that sustainable homes are good for their pocket, good for their health and for the planet.” Starting next year, new regulations in England will require all new buildings, including homes, to reduce energy consumption by 25%, decrease carbon dioxide emissions and meet higher environmental standards.
Mark Your Calendar for the 2005 National Green Building Conference The 2005 National Green Building Conference is scheduled for March 13-15, in Atlanta. Click here for more information or to register. Kentucky Builders Work With State Officials to Streamline Development Plan ReviewsRecent negotiations between the Home Builders Association of Kentucky and officials in the state's Environmental and Public Protection Cabinet have resulted in a streamlined development plan review process that will save developers thousands of dollars. Governor Ernie Fletcher announced the reforms at a recent Home Builders Association of Louisville that was attended by more than 300 of its members. While the governor made the reforms official, Rocky Pusateri, chairman of the Louisville association's Land Development Committee, gives credit to Scott Smith, the Cabinet's director of regulatory affairs, for getting the reforms through. “As an engineer, Scott understood the plight of developers who — in urban areas of the state — were having their plans engineered three times,” said Pusateri. Pusateri and his committee last February began pushing for reforms to a development process that required plans to be reviewed and approved at both the state and local levels and that was redundant and time-consuming. Reviews at the state level alone were taking as much as three months, he said. Under the revised process, developers in the metropolitan areas of Jefferson County and Northern Kentucky, where local sanitary engineers already review their plans, will not have to submit those plans to the State Division of Water for further review. Pusateri noted that rural developers will also see faster approvals because developers in the major growth areas of the state won’t be clogging up the system with their plans. “This initiative helps everyone in the state,” he said. Pusateri also hopes that other metropolitan areas of the state where professional engineers review plans will be able to take advantage of the same initiative offered to Louisville and Northern Kentucky. For more information, e-mail state executive officer Bob Weiss, or call him at 502-875-5478. Federal Court Asked to Hear Long-Simmering Property Rights Case in New HampshireDevelopers in New Hampshire have asked a federal court to decide if they are entitled to damages for the violation of their Fifth Amendment property rights under the U.S. Constitution after they have exhausted any legal remedies in the state courts. The case is being watched closely by the home building community, because federal courts routinely refuse to hear a developer’s takings claim against a local government if it hasn’t first been pursued at the state court level, but then refuse to hear the case because it has already been settled by the state courts. The long-simmering lawsuit arose over an ordinance in the town of Fremont that placed a cap on the number of building permits that could be issued in a given year. The ordinance was used to deny developer Henry Torromeo and MDR Corporation the ability to develop five lots and 14 lots respectively. Both sets of plans had been approved by the planning board and recorded with the county; and Torromeo’s lots, approved in 1997 before the ordinance took effect, were vested under state law so that they were not required to comply with any subsequent changes in the town’s land use laws for a period of four years. The New Hampshire courts eventually ruled that the Fremont ordinance was illegal. While a municipality has a legitimate interest in regulating and controlling growth, and a reasonable cap on permits may be an appropriate means to achieve that objective, the courts determined that in this case the cap was not supported by a validly enacted Capital Improvement Program. The state legislature requires CIPs to support any growth control ordinance. As a result of the lawsuit, both developers received permits from Fremont in 2000, but neither received compensation for the damages they had sustained as the result of the illegal ordinance. They pursued further litigation for monetary relief, and the state’s Superior Court ruled that they were “entitled as a matter of law to recover damages for economic loss due to Fremont’s attempted enforcement of its invalid Growth Control Ordinance.” Awards of $23,800 to Torromeo and $71,600 to MDR were granted by the court, but at the end of 2002 that decision was overturned by the New Hampshire Supreme Court. Last November, the developers filed a federal civil rights claim in U.S. District Court in New Hampshire. The lawsuit was filed under Section 1983, which provides a possible remedy for property owners whose Constitutional rights have been violated. “Considerations of fairness and justice are the thrust of any takings analysis,” the developers say in their motion. “It is neither fair nor just to require a takings plaintiff to ripen a federal constitutional claim through initial state court litigation, and then deny him federal court access on his federal claim because he initially litigated in state court.” The town of Fremont has asked the federal court to dismiss the case. NAHB’s legal staff has been working with the developers’ counsel on this case. For more information about this case, e-mail Duane Desiderio or call him at 800-368-5242 x8146 or contact Jon Luther, x8329. Maryland Court Rejects Challenge to Development AgreementThe home building industry recently scored a victory in Maryland's highest court in a case where a land developer's fully-executed development agreement with a local government was under legal attack by a citizens' conservation group. The Queen Anne's Conservation Association, headquartered on Maryland's Eastern Shore, opposed development of an active adult community by K. Hovnanian Companies, based on a variety of legal objections, most of which were related to zoning. In Queen Anne's Conservation, Inc. v. The County Commissioners of Queen Anne's County, the Maryland Court of Appeals ruled that the conservation group lacked standing to challenge the development agreement in court because the group had not exhausted all of its administrative remedies. Under the administrative appeals process, the group was required to appeal the matter to the local board of appeals — which it failed to do. The case represented an important legal victory for K. Hovnanian, which had spent several years obtaining approvals for the proposed Planned Unit Development (PUD). Had the court granted standing to the conservation group, the case would likely have lingered in the judicial system for another two or three years, at a very high cost to the developer. In reaching its decision, the appeals court determined under what circumstances and in which forum a third party can launch a collateral attack on development agreements that have been executed by developers and municipal governments. The development agreement process is a relatively new land use tool in Maryland, so the court's ruling will have bearing on similar cases in the future. NAHB filed an amicus brief in the case on behalf of K. Hovnanian, emphasizing the importance of protecting the development agreement process from open-ended legal attacks by third parties after agreements have been executed. This clearly resonated with the court of appeals, and its opinion quoted extensively from NAHB’s brief. Development agreements, which serve the critical function of vesting developers' property rights, are vital to both the public and private sectors in fostering predictability and certainty in the development approval process. Allowing these agreements to be attacked at any time by third parties would be extremely damaging to the stability of the process by which land development is approved, financed and delivered. For more information on the case, e-mail Jon Luther, NAHB staff counsel, or call him at 800-368-5242 x8329. Interest Groups Put NOR Laws and Affordable Housing Concerns on the AgendaRepresentatives from NAHB, including the association’s Senior Officers, have been stepping up their participation this summer in meetings of national interest groups in order to focus attention on state and local issues that are of special concern to the industry:
For more informatiion on NAHB's relationship with ALEC, NCSL, NACo and other groups, e-mail Carlos Gutierrez, NAHB’s industry relations director, or call him at 800-368-5242 x8242. Council Provides the Answers for Home Builders Considering Rounding Out Their BusinessesIf you have ever wondered about the value of NAHB’s National Commercial Builders Council, I invite you to attend the meeting of its trustees at the association’s upcoming fall board meeting in Columbus, OH. I can assure you that a visit is highly worthwhile for any NAHB member who wants to learn how to thrive in today’s commercial construction marketplace. At our spring meeting in April, we heard what was on the minds of the council’s members, and those who attended received first-hand information on how to cope with the rising price of steel and materials shortages; how NAHB is working with OSHA to ensure that some of its proposed rules ensure job site safety without being unnecessarily burdensome; and how to avoid getting fined by the Environmental Protection Agency for minor infractions. You can read more about these topics in the current issue of Commercial Builder magazine. Every bit as valuable at these meetings are the terrific opportunities for networking. Many of the council’s members are old pros who have spent years building a variety of light commercial projects — from banks and office buildings to mini-storage facilities and strip centers. At the same time, we are seeing more and more men and women in the council who have been primarily involved in the residential side of construction and want to round out their business opportunities. Our meetings provide an unbeatable setting for the exchange of ideas and expertise among these industry professionals. Our members have joined the council for a variety of reasons, and here are some that I commonly hear:
For builders who have toyed with the idea of diversifying their business but feel that they need more information before proceeding, or for those who have dabbled in commercial with one or two small projects and are now wondering if it’s the time to step up to something bigger, the National Commercial Builders Council is the place to find the answers they are looking for. For information on joining the National Commercial Builders Council, e-mail Petra Beane-Moore or call her at 800-368-5242 x8433. Housing Industry Welcomes Summer Project CRAFT Graduates in TampaOn July 29, four students enrolled in the Home Builders Institute's Project CRAFT(Community, Restitution, Apprenticeship-Focused Training) program in Tampa had a chance to experience what they thought they never would again — a commencement ceremony. This was their official welcome as members of the nation’s residential construction industry. Bill Paul, president of the Tampa Bay Builders Association and an HBI trustee, encouraged the graduates to use their newly acquired trade skills “to build a life in the nation’s most rewarding and prosperous industry.” The four students donned robes and mortar boards for the ceremony at Middleton High School, which was attended by family, friends and community members. Reverend Clete Sutton, a Tampa police officer, encouraged the students to use their talents “to inspire other young people to have the courage to do the right thing.” Project CRAFT/Tampa opened its doors in July 2001 funded by the Florida Department of Juvenile Justice to provide skill trades training and employment support for at-risk 16- to 19-year-olds. While in the program, the students are awarded a pre-apprenticeship certificate in carpentry and also receive academic instruction from a Hillsborough County school. Students spend part of their training time giving back to the community by practicing their trade on projects such as replacing the railing and steps at the Police Athletic League or building picnic tables for local schools. The graduates will now take these skills and put them to work as members of the industry’s workforce. For more information on Project CRAFT/Tampa, e-mail John Hattery at HBI, or call him at 800-795-7955 x8916. Home Owners Can Throw Their Food Waste Disposers a Chicken BoneIn the information and support it provides its customers, In-Sink-Erator advises consumers that they can safely put chicken bones, ice cubes and peach pits down the company's new food waste disposers. “In fact, we recommend hard food waste, says Dave MacNair, the manufacturer’s vice president of marketing. “Bones are actually good for the disposer because they scour and help clean the grind chamber interior.” Headquartered in Racine, WI, In-Sink-Erator is a member of the National Council of the Housing Industry — the Supplier 100 of NAHB. In-Sink-Erator offers these additional tips to help consumers get the most out of their disposers:
In-Sink-Erator’s Web site provides information on the company’s entire product line and can help home owners decide which disposer model is best for their household and find their nearest retailer or plumbing contractor. The site also provides information on service warranties and other products, such as instant hot water dispensers. In-Sink-Erator says it originated the in-sink food waste disposer more than 70 years ago. In-Sink-Erator’s innovative Septic Disposer® is the first disposer designed specifically for homes with septic tank systems, according to the manufacturer. Using injection technology, this disposer adds microorganisms to continually break down food waste and improve the performance of septic systems. The Septic Disposer is equipped with a cartridge that contains natural microorganisms and a citrus scent to help control sink and drain odors. The 16-ounce cartridge is easy to install and lasts about four months. For more information about In-Sink-Erator products, click here or call 800-558-5700. This feature is solely for educational and informational purposes. Nothing on this page should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the featured product or the product manufacturer. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained on this page.Mysterious Cracking — Causes and RemediesDear Builder’s Engineer, I got called to fix a large sheetrock crack in an older home. It was obvious the problem was foundation settlement. But the house is built on a solid bedrock outcrop. I didn’t know rock settled. Your thoughts? — Rick M., Golden, CO Solid rock does not settle, particularly under the relatively light loading a residence would apply. Even fractured rock is very unlikely to settle unless an earthquake or bomb blast were involved. I was involved in a similarly puzzling project once. It was a large custom home built on a rock outcrop at the top of a knoll. The owners complained they’d had the same drywall crack repaired several times, but it always came back. I knew the problem had to be settlement, but on solid bedrock? Into the crawl space I went. All the footings were placed directly on exposed bedrock — except one. Unfortunately, this particular footing supported a main roof beam and a floor girder. With a little probing and digging, I discovered a five-foot deep “bowl” in the rock. At first I couldn’t tell it was a bowl because it was full of soil and leaves.The original contractor, rather than scoop this debris out, built his footing on top of it. Over time, the material decomposed, compacted and settled. The rest of the house, being built literally on rock, didn’t budge. This is called differential settlement. The fix was to jack the settled area up, scoop out the bad soil, pour a new footing directly on bedrock and let the house back down. Had the bedrock been sloping, rotohammered steel rebar dowels would have been embedded into the rock and extended into the new footing to keep it from sliding. Sheetrock cracking is caused by structural movement of some sort. If it’s not vertical settlement, then it almost has to be lateral (sideways) movement. I recall a project with severe plaster cracking on all four exterior walls. It was an old schoolhouse converted into a residence. The foundation was sound, the floors level. Inspection of the roof framing told a different story, however. The roof was hip style, fairly steep. Rafters bore on the exterior walls and extended upward, terminating at the ridge or a hip, depending on their location. There was a serious problem: there were no collar ties or ceiling joists; nor were there any ridge beams or hip beams. In short, there was nothing to take the outward thrust of the rafters, except the exterior walls. Over the years, all four exterior walls had bowed outward — nearly a foot in the middle of the long walls. It was a miracle that this place did not implode in one of our snowy, Northwest winters. The fix was to jack the roof system up, and using come-alongs, winch the exterior walls back together as best we could. Then new hip and ridge beams were installed, their bearing extended all the way down through the structure to existing or new footings below. It was a messy, expensive job, but the insurance company paying the bills determined it was more cost-effective than a complete roof system replacement. In summary, wherever you’ve got significant drywall cracking, you’ve got structural movement. The trick is determining the cause and properly fixing it. Simply replacing or patching the drywall is like putting a Band-Aid over a broken bone — it won’t work. To complicate matters, a small amount of cracking may be due to wood shrinkage — a common phenomenon, especially in newer homes. So, if in doubt, don’t be afraid to get a second opinion. The wrong “fix,” in the long run, will cost far more than a few hours of an expert’s time. Tim K. Garrison P.E. of ConstructionCalc.com has authored books and short courses and lectures on topics relevant to builders. Got a technical or management issue? E-mail buildersengineer@constructioncalc.com. Tim reads every one. This column cannot be reprinted without permission from the author. The views expressed in this article represent the personal views, statements and opinions of the author and do not necessarily represent the views, statements, opinions or policies of the National Association of Home Builders. NAHB does not necessarily endorse any of the views expressed by the author and NAHB is not responsible for any direct or indirect consequences arising out of the views expressed in this article.
Sign Up for 2005 Committees and Councils by Sept. 3NAHB is looking for members who would like to serve on any of the association’s various committees and councils for the 2005 term. Members will be able to provide leadership, expertise and experience on the issues and challenges facing the industry. The term begins immediately following the |